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tv   Closing Bell  CNBC  April 19, 2017 3:00pm-5:01pm EDT

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with guest hosts for remainder of the week. on may 1 a one-hour program hosted by eric bolling will debut. 7:00, story with martha mccallum, tucker carlson with "the five." that's the new line up. >> "closing bell" starts right now. ♪ >> hi, everybody. welcome to t"the closing bell. >> a lot going on suddenly in the last hour. breaking news, matter of fact, in the last hour. bill o'reilly is out of fox news in the wake of the news of sexual harassment suits and advertising pulling ads from the show. >> snapchat's ipo was great business for its last quarter. find out more when we speak with the company's ceo.
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>> american express reports earnings after the bell, but critics say perks are not what they used to be and it is weighing on the dao component. we have a debate on it. >> how much the credit card craze is happening amongst millennials. >> intense, yes. >> that's ahead. we begin with ibm's fall after reporting its 20th consecutive quarter of year on year revenue decline. the company cfo discussed that when we spoke to him after those results. >> that 20 quarter headline is probably not the framing that we're thinking about. we're thinking about how do we continue to move the business and our clients to get to growth. now, the portfolio, the portfolio will grow. i am confident that the ibm company will grow again, but it is taking -- you know, we're taking time. >> our baub pisani over by the trading post with more. it is weighing on the market today, bob? >> great. good to see you. there's a new risk to the market and that's earnings risk. we haven't had it before. let me show you ibm.
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they normally do four million shares a day. look at that, 16 million shares, more times more than normal, down 8%, the whole reason the dao is down. the important thing is you have several issue. stocks are expensive, risk to the down side. first problem was the revenue miss ibm had. the market is merciless about that. there's a second reason there's a problem out there. ibm along with many stocks had a huge runnup post-election. it went from about $154 on november 8 or 9 to about $180 in mid-december, a move up of about 17%. it has slowly been coming down in the last is efrl weeks here. three things are going on. number one, you combine a high priced stock or stock moving up rather aggressively in the last few months with a big revenue miss with the idea stocks are expensive in general, and combine it with the trump agenda, the tax cut can issue kind of fading away as an influence on the market.
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you put those three or four things together and you get sell. by the way, this illustrates the real problems with the dow jones industrial average. price weighted index puts a lot of pressure. s&p 500 is not having those moves today. >> that's true. it is a problem when they're down. when goldman was up with the new highs, everyone liked the arrangement. see how it goes from here. appreciate that. to morgan stanley getting a ratings boost. >> hey, mike. goldm goldman sachs the outlier. morgan stanley the last to report as you said. coming in ahead of expectations with 22% year on year growth with trading revenues. investment banking also strong. wealth management offset by income. james goldman was optimistic on common ground being found moving forward on deregulation. >> there are a number of very
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specific fixes that both relieve the expense and time consumption now that the plans are relatively mature without detracting at all from the regulatory rigor necessary for a strong and healthy banking system. and for those bank has are fully capitalized, which we clearly count ourselves among them, it provides with an opportunity to return the excess capital to shareholders. >> he said anything below 30% on corporate taxes, which appears probable, would be very positive to morgan stanley. banks for the most part higher today after a few tough days of trade. morgan stanley reminding shareholders of the improving environment on a medium or long-term perspective. shares up 2.6%. >> quite a contrast with goldman yesterday. thank you, will. let's go to steve liesman who has been combing through the fascinating, riveting book just released. >> do i detect sarcasm in your
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voice, kelly? >> a little bit. maybe not, maybe there's plenty. >> let's go. the policy on certainty and promise of president trump really are coloring the normally boring beige, but there are comments like this from boston. several contacts expressed concerns about policy uncertainty. firms said that a border adjustment tax would have mixed effects but hope for rest lose. stuff like this from dallas. a few manufacturing contacts noted considerable policy uncertainty, especially rashding changes that would impact trade with mexico. growth was moderate to modest. areas of policy concern in the base included immigration, tourism, taxes and trade. this is second report in the row to mention these kind of concerns prominently, and it serves a potential warning to the trump administration failing to deliver along with lingering uncertainty on the outlook could undermine business as much as policies could potentially help. >> overall sounded like a pretty good report.
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anyway, always good nuggets there. steve thank you very much. our steve liesman. joining our "closing bell" exchange we have peter joining us from the lindsey group. anton at post nine from men deny capital advisors. our own rick santelli checks in from the cme in chicago. anton, let me begin with you. how important so far are the bank results that we're getting? what do they tell you about this market? >> well, i mean the numbers are pretty good. i mean the only one that really missed was goldman. i think long growth is one of the weak spots out there, but we've seen a record bond issuance in first quarter. obviously showed up in phase but not lones outstanding. the most important thing is the optimism expressed. jamie diamond talked about opt miss among businesses and consumers. i think that that optimism will translate into higher growth and a hire earnings, and i think we will see that from banks going forward. >> keith, you know, despite that kind of expressed optimism about
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the consumer from the bank ceos, the market itself has taken on a bit of a defensive tone in the last, let's say, six to eight weeks. i guess the question now, has it just been biding its time, gathering a little energy for maybe another attempt at the old highs, or is this a change of character in the market we have to get used to for a while? >> it is an excellent point. i think we have to wait another couple of weeks as the earning season plays out here. you are right. if you look at the broad market indexes, they've been consolidating a little bit. we caught them over sold a couple of weeks ago and they've had a difficult time getting off their back. they've been buffeted by certainly geopolitical concerns, other things coming out from various companies and sectors, people are concerned about that. we've seen the ten-year trade all the way down on the yield there, and we've actually got the ten-year note overbought yesterday. there's been so much money pouring into that sector. when i look at the broader market, michael, i think what is really critical as we look at it today -- and we'll get a couple of key reports tonight -- is take a look at the transports. the transports from january
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2016, they turned around, a long-term down trend and they've been in an up trend. they're vacillating at the long term trend line. they've lost 6% since march 1. it is more for them to hold up. when csx and canadian pacific reports tonight, people should be aware what they're saying about the long-term future. there's been wage pressures inside that sector. >> yeah. >> other types of concerns. but if they can get a foothold and continue to march forward, i think it will drag the rest of the market back with it. >> great point. peter, some people have said one of the reasons they think bold yields have fallen is concerns over a government shut down that could happen in the next few weeks? is that a reason to worry? >> we've seen this movie multiple times over the past few years, it's been quietly resolved. so i really think it is other issues. i think it is the fed that's raising interest rates into a a slow economy. i think it is the question of tax reform and whether it comes this year or next year, and obviously people are now fearing next year. the implications of that could
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be a freezing of this business decision making this year. so i think it is a variety of factors and not really the debt ceiling issue. >> rick, you know, we were talking about the fed's base book. there was mention in there about a tight market and potential wage pressures looking widespread. the treasury market didn't seem to take much out of that. what's your read right now? you have the 10 year sitting around 20, depending how you define it, that's about the low end of its range. >> i think there's a lot of aspects to this, but keeping it simple, you know, the two-year note has been on the soft side. all things being equal, the road the fed is on should keep the two-year note yield firmer and it is not. i think the market is looking at the notion, no matter what kind of comments are coming out of fed officials, that the idea of balance sheet reduction and a coexistence with rising rates is going to coexist together, and i think most traders just don't really believe that.
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i know that many people on cnbc have talked about it, but i do think one will come at the expense of the other in some form. i think the market is pretty smart about that. i think the market in the past has learned its lessons well. the fed is going to stretch this process out as much as they can, and i still believe that the process has less to do with the economy and more to do with the fact that the rate just has to be higher. i mean so many reasons. but let's keep it simple. you know, in 12 months we go into recession, they do need more fire power. it is an argument i made years ago, but, of course, you know, the expansion has continued all of these years. now, it may run out of runway and as far as rates in general, i don't see anything that's going to cause this pattern to change any time soon. i think this melt is upon us, and depending upon which part of the curve starts to melt faster i think it could have bigger implications. >> so, anton, let me pair it with what you were saying about how you're reading the bank results as positive. where does it leave us in a low rate environment and where does it leave goldman? >> well, you know, i think
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goldman had a hiccup. let's see if there's a trend here and see if they do it again. i think you got to give 'em a pass for at least a quarter. you know, everybody else got it right. they didn't this last quarter. let's see what happens. i think as far as the low rate environment, it could put a lot more pressure on mergers and acquisitions in this space shall and i think that's really been an ongoing story for the last few years where you've seen 5% of the industry sell each year. i think we're on a similar pace this year in higher prices, and i think lower rates will put pressures on companies hoping for higher rates. >> peter, as we hear from a lot of companies, i guess i'm wondering what you think about the cadence of the u.s. economy right now. we've just been going through that now typical, kind of first quarter, somewhat surprising slow down. it shouldn't be surprising anymore, and it is about to pick up a little bit from here. >> well, again, that's the hope. we keep using that word hope and higher confidence, but some of the ceos i listen to still don't necessarily see reason for an acceleration in growth outside of just the hope for it.
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the actuality in real business activity, we're not seeing the pick-up in q2 i think you should see after what's likely going to be a very mediocre q1 print. i think we're still stuck in this 2% type economy with hopes obviously for an acceleration, but no physical signs of it just yet. >> before we go, keith, what to you make of the extended weakness in oil here? >> well, i've long said i think oil is going to be stuck in a range for the foreseeable future. you know, the north american producers, particularly in the shale formation regions, they've used the last few years as they've been boroughing more money, renegotiating their debt, they're been cleaning up balance sheets, but they used the opportunity to invest more in the technology for getting a barrel of oil out of the shale formation. what that does is drives down the cost per barrel and they can make money between $45 and $50 a barrel. as long as it stays in that sweet spot they will continue to produce. that will put a cap on oil prices, but also a floor on it
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as well because they -- the producers in both opec and north america will play in that range. they can make money in that range, and that's where we're going to be right now. i wouldn't take too much from weakness in oil. i would take more if it got all the way below $40 a barrel, but right here, right now, i'm not real thrilled about the price action either way. >> yeah, it is only 4% today but right in the middle of the range, smack in the middle of it. gentlemen, thanks, everybody, for joining us here for our "closing bell" exchange today. with about 45 minutes to go and the market has turned negative, the dao is down 106 points, the s&p to nearly 3 points. transports are positive by 55 points. the nasdaq is positive by 18, russell up 6. >> we have big earnings after the close. qualcomm, american express and csx reporting. we'll break down their numbers as soon as they hit the tape. >> and billow riley is no longer a factor at fox news. up next, we will take a look at the financial blow his firing may bring to 21st century fox.
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welcome back. the dow the worst performing
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today, down half a percent. a lot we mentioned by a big price component, ibm after earnings miss last night. s&p down and the nasdaq and russell positive. crude oil is lower after new data showing the first weekly increase in gasoline supplies in two months. among the energy laggers include hess, conocophilips and chevron. not huge declines though, less in fact in the price of oil. >> apparently a roll in the oil contract making things a little more noisy this afternoon. >> tis the season. >> that's right. billow riley ousted from fox after the "new york times" reported a rally in fox news, settling harassment cases. in san francisco with a look for implications for the look at the media giant. >> reporter: this after much debate and speculation is official after mounting pressure, fox saying after a thorough and careful review of the allegations, the company and billow riley have agreed that o'reilly will not be returning to the fox news channel. they announced tucker carlson
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will take over the 8:00 slot wloond "the five" will move to the 9:00 about p.m. slot. saying fox news has demonstrated again and again the strength of i think talent bench. we have full confidence the network will continue to be a power house in cable news. the media conglomerate shares are down 5.5% since april 1 when the "new york times" first printed allegations against o'reilly. the o'reilly factor was the highest rated cable news show for 15 years, bringing fox news an estimated $325 million in revenues over the last two years. that makes it the top earner of any show on fox news, cnn or msnbc. now, in his absence this past week ratings declined by about a quarter, about 25% over four days, while fox news has topped cable ratings over the past 15 weeks o'reilly is the latest major departure in the past year, including former fox news chief bob rails and anchor
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grecher carlson, greta van ses ter an and megyn kelly. a number of analysts said they believe that the platform fox news is bigger than any one personality. guys. >> julia, we're obviously watching the stock for immediate reaction. i'm surprised it has been so muted. also heard on "power lunch" the exposure they have to the show and the dollars it rakes in seems to keep diminishing depending on who you talk to. >> that's right. i think it is worth noting the stock is down about 5% in the past couple of weeks since news of the scandal first broke. there has been some movement in the stock, and i think that there is hope that the -- you know, from investors and analysts that the rest of the line-up will rearrange and that those ad dollars will find another home. it is also worth noting with fox news that a significant portion of those revenues come less from advertising but also from the subscription fees from the tv distributors, the comcasts, you
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know, directvs of the world. so it is certainly fascinating to watch. a lot of debate about how much ad revenue exactly o'reilly himself brought in and how crucial he was to the line-up that he was sort of the center piece of. but that's a question, is the platform more powerful than the individual personalities. >> yeah, julia. you mentioned the advertising dollars. obviously they've had a week or two since many of the advertisers boycotted to maybe find another home for those dollars. obviously not a a big sample size, but it will be interesting to see if those advertisers quickly sort of test out the new host, whoever that might be, and basically say, look, this is an audience we need to reach somehow? >> yeah, we have to remember that advertisers buy a bundle will. it is not like they buy specifically for this show, so many of them, even when they were boycotting the o'reilly factor were slotting their ads into other shows on the network. so there wasn't -- there was no specific immediate impact because of a lot of those
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advertisers boycotting. so it will be interesting to see what happened. we saw a decrease in ratings in the past week when he was away on vacation, but once we have the tucker carlson in his slot, we will see how the ratings change again. so there have been a number of changes at fox over the past year, as i mentioned, and still fox ratings have been, you know, at highs, topping all of their rivals over the past 15 weeks. so despite the departures of megyn kelly and gretchen carlson and even the former chief of fox news roger ailes. >> yeah, all of a sudden it is not one or two things, it is quite a bit. we will see what happens. thank you, julia. meantime, 40 minutes to go until the close. dow down triple dig et cetera, at the moment it is 20,420. seems like 21 -- did we only close above that once or twice? >> we actually never cloeed above 2400 on the s&p, we just touched it. elsewhere in the dow, meanwhile american express will be reporting earnings after the bell today. we will be delivering those numbers to you, plus two leading
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analysts debate whether am ex's best days behind it or not. coming up. >> also ahead, what lengths would you go to for a new credit card. we are going to speak to the millennial who chased town her dream in costume. she will join us. stay with us. [weather reporter]: governor has declared a winter weather emergency...
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. welcome back. here's a couple of political stories we're following today. president trump weighing in on democrat john ossa falling short of winning the special election in georgia's conservative sixth district. quote, despite major outside money, fake media. glad to be of help. he received 48.1% of the vote. he needed 50 to win the seat outright, left vacant by tom price. he will face a single rep, karen handel in a june run-off. voted to approve teresa may's surprise call for a snap general election, it will be on june 8th. may needed a two-third majority from members of parliament to proceed. today's vote officially and comfortably passed that. >> i confess to being ignorant
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parliament had to say you can, in fact. >> only because under cameron they put in a new rule about term limits or something about you couldn't call an election within five years. the only way you could do so was if you either had a no confidence vote or got more than a two-thirds majority in parliament i think. >> it is not something that goes back 1,000 years? >> no, apparently quite recent. >> there you go. i feel better about it. >> right, it's been on the books or not on the books for a couple -- anyway. >> exactly. since the magna carter. >> with a little more than half hour to go about of the bell, dow down 100 points. s&p 500 towing the flat line. td ameritrade ceo speaks with us in a first on cnbc interview next. we will discuss how his company is faring in a fierce online brokerage war. you always pay
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for a free quote today. liberty stands with you™ liberty mutual insurance. in the final half hour trade, you see the dow down 127. ibm good for about more than half of that. dow transports though out performing the major averages today, led by domestic tank operator kirby group and avis and united which has been under
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a cloud. airlines up 1%. >> less than half an hour to go. i'm here with mark newton from newton advisers. you're talking about consumer staples, and the reason is this sort of boring -- let's just call it sector, is one of the best performers of the year. tell us what you think happens from here. >> i think the sector should continue to show very good signs of technical strength and really an economy and market that's ruled by mass uncertainty right now. everybody is expecting a big pull back, 12% since the election. if you look at the sector, it's been one of the better performing and looks very, very good at current levels. you have what is called a cup and handle formation technically where we rallied up to test highs, went side ways. yesterday consumer staples was best performing sector moving up since july highs had -- >> come on, this is all i have to live for, mark. come on, continue. beautiful thing. >> this is a promising formation and generally supports a view staples should move higher, particularly food, beverage and
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tobacco looks good. >> it is at a high valuation. people loved this sector because they like the yield and stability of it. what p has there? by the way, what does it mean for the overall market if it continues to be a strong performer? >> we've seen a time when equities were relatively weak since the beginning of march. so any sort of pull back that traditionally happens during the spring, summer, fall months, this will be the sector to go to. we have concerns about the european elections coming up, brexit and policy uncertainty. people in general have been afraid to put money to work. volume has been very, very low. this sector continues to be one that's been strong. it is up about 7% year-to-date, the third best performing sector, and in general continues to see signs of improvement every day. stocks like pepsi, altria, philip morris continue to be strong. >> 7% move. it has steam on it. thank you so much, mark. >> thank you. >> appreciate you being here. mike newton. mike. >> kelley, i was going to tell you to draw the steam out of the coffee cup. time for a cnbc update with sue
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herera. >> i was going to do the same thing. news update at this hour. oppositions forces say civilians were fleeing isis controlled areas near raqqa today. this follows clashes between the militant group and a hurd kurdish-led alliance. former vice president joe biden giving keynote speech at the opening ceremony for the museum of the american revolution in philadelphia will, and he talked about american principles. >> our constitution and our adherence to its principles are the reason why we remain the most respected, emulated, revered nation in the world, notwithstanding what you hear today from some others. >> and the new england patriots were visiting with president trump at the white house today to celebrate their super bowl win in february. they gave the president a patriots jersey with the number 45 on it. there it is.
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quarterback tom brady did not attend, citing family concerns. that's the news update at this hour. kelly, mike, back to you. kelly, you missed your calling. you're a great artist. >> poor mark. he is a good sport for dealing with me. we'll have more about that later. thank you, sue. by the i what, want to quickly mention the market is at session lows, fresh ones basically. 130 points low on -- i think we were down 135 a moment ago. td ameritrade coming in strong. revenue up, assets up, number of client trades on the rise, but earnings per share missed analyst estimates on stocks. down 13%, up 1% today. >> joining us at post nine and first on cnbc interview tom hockey, td ameritrade ceo and president. thanks for being here. >> thanks for having me. >> we ran through the metrics
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that looked good in the quarter. any kind of way to figure out whether this has had effect on client values or your finances? >> it has been interesting to figure out because we've actually seen almost an increase, an overall increase of money in motion. we don't know how much is a result of heightened media effect as a result of the lower pricing. we have seen an influx of assets and clients coming from full service that might have woken to the fact that trading is pretty cheap. that has increased by almost -- plus year over year. it has been a pretty good quarter for us. imagine what that could do. >> imat not sure our shareholders would that be happy with us. certainly the clients benefitted from this competitive move by the industry to lower price. let's face it, this industry was formed as a result of providing low cost trading in a world where -- until the regulation changed, of course, it was a
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much higher cost per trade. so this has been an inexorable trend down for 40 plus years. >> you're in the process of integrating sky trade. i wonder about what that does to your kind of client mix, the general orientation of your business, whether it is very much more transaction oriented or is it still kind of a broad investment platform? i ask because obviously the entire movement of individual investors has been towards passive instruments. i don't know if it is more buy and hold or it no, but it would seem to be against the idea of trading a lot of individuals stocks. >> right. there's a couple of questions in there. first of all the scottrade client base look a lot like ours. the one difference we found out, which is why we believe there's great revenue synergies, is because their clients tend to be equity traders. our clients before we bought think or swim a number of years ago were primarily equity traders and they were introduced into our advanced platform with derivatives trading and they went to that.
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we expect the same trend on scottrade as well. you would think that would drive down trading volumes, but as you saw record trading volumes year over year. in fact etfs in general as an instrument have driven an increasing level of trading because active traders like to trade etfs. >> so there's been an increase in active trading of a passive instrument? >> absolutely right. >> yeah, okay. that's great. wanted to ask you about snapchat, which apparently did a lot -- and we spoke to j.j. kent about this as well, but not only to drive trading but actually new accounts, right? >> yeah, we saw quite an infliction. ipos obviously create a lot of interest. snapchat was, you know, quite an interesting ipo. this one in particular was unusual because people like to trade what they know, and, of course, a younger audience likes the trade on social media. and so your traditional audience moved to snapchat so it skewed younger. literally we had an influx of new accounts. trades on a mobile platform ticked up as a result of it, all
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of the things you would imagine that would happen if a younger audience started trading? it introduced another generation, i guess, to trading. >> is that something that -- i mean obviously you would love to have lots of younger customers come your way, but i just wonder what the threshold is for a truly attractive profitable customer for you at your scale, because obviously you have -- you know, the robin hood app offering free trading and they talked about people signing up just to trailed snap. >> the great thing about our platform is we're already at scale. we're pretty big, and once we close on the scott strayed acquisition we will have over a trillion dollars in assets and will be the largest trading platform. we have enough scale. as you know, the marginal cost of the trade is pretty low. so the key is to attract new clients, get them to trade however they're comfortable, at whatever frequency they're comfortable trading. give them great platforms, great education and make sure they're profitable. >> so is there any halo effect from people trading snapchat and looking for something else, or do you have to wait for the next airbnb or uber or somebody else to list?
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>> i think it is like many of these. you mentioned uber. first time you use uber you get hooked on it, right? i think the same thing can happen when people are introduced to trading. okay, that was an interesting experience, like the platform, let's try the next one. >> make up my losseses. thanks for joining us. tim hockey of td ameritrade. the dow is down 125 points. the s&p down 5. transports still positive. oil has taken a hit throughout the session today. nasdaq and russell are still higher. up next, just what retailers needed to hear, new data showing online sales are actually more expensive than in-store ones. we will have few details and what it means for the sector. >> and more and more people leaving home without their american express cards. ahead a bear and bull debate whether it is time to take am ex out of your portfolio and wallet.
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will your busine be ready whenrowth presen ielf? or fa br or eand your office and keken whater comes next. fi out howmericanexess rds ansec n helprepare you for grgrtht open.c.
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fi out howmericanexess rds ansec t's g[ whpe ]og. find your awesome with the xfity x1 voiceemote. that'azing! welcome back. let's check out some more of today's market movers. intuitive surgical hitting a 52-week high. that surgical robot maker reporting better than expected quarterly earnings last night and company raised full year guidance for procedure growth. up 6.5%. baidu prans to offer software
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for autonomous vehicles, to peed up development. they want to come to cars what google android has become to smart phones. an operating system that will power a number of different driverless vehicles. telling the "wall street journal" the company is on track to deliver autonomous commercial vehicles next year and will mass produce by the end of 2020. 2% pop in their shares. >> i think he said he wants to become the android of investing today. i think that's the ideal for everybody. >> it is amazing. this was one of google's little ventures how many years ago? >> that's right. >> now it is what everyone wants to be. >> conventional wisdom suggests running retail stores is more expensive than selling the same merchandise on line, right? turns out conventional wisdom is wrong. courtney reagan here to explain. >> reporter: hi, mike. running stores is not cheap but more profitable than many retailers selling the same goods on line and using stores as distribution centers, well, that's actually the least profitable option. this model was bit for cnbc by
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retail consultants alex partners to show the differential for traditionally store-based apparel retailer selling a $100 outfit, in store, online or a combination. a typical $100 clothing purchase in store has associated operating costs like rent and labor of about $28 and around $40 costs for the goods. leaving a profit margin of 32%. that same $100 outfit with the same $40 cost but bought online and shipped free to a shopper from a fulfillment center has operating costs of $30. distribution costs can be four times higher, overhead three times more. when shipping and fulfilling individual orders compared to truck loads to stores. for a profit margin of 30%. what if a shopper wants to order online but pick up that $100 outfit in store? now you're running two channels to fulfill that order. the operating costs jump to 37%, and the profit margin shrinks to
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23%. using stores as distribution centers is the least profitable model. operating costs soar to 48%, even higher overhead and infrastructure costs to operate the site and the store and ship the goods twice. the profit is now just 12%. 20% below the margin of a pure in-store sale. what makes online less profitable but not accounted for in our models because it is impossible numerically is the cost of return. returns for online orders when it comes to clothing can be six times more expensive to process compared to the same returns in store. by the way, 30% to 40% of all clothing ordered online is returned. >> it is amazing, courtney. you know, it is so illuminating considering so many people feel it is a no brainer to say, target should just use its stores as distribution centers. obviously, you know, maybe amazon set itself up to look a lot more like target if that was
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the ideal way to do it and i guess not. >> exactly. most retail experts believe that the perfect combination is some level of stores and online, but we don't know what that perfect combination is. so if you think about a retailer like target traditionally they started with this big store fleet, 1800 of them, and then they also, by the way, have to start up their own online business. so now theon loin business is like the start-up running inside a legacy department store. if you want to use both of those channels, target's got to run both of them for you. the stores and the online component. it is the shipping that really, really kills them, especially shipping from store because you got the goods initially on a truck to the store, and now you have to ship them out one by one to a shopper if that's where they come from. >> amazing. meanwhile, biggest competitor seems not to care much about maximizing profit. it is not an easy game at all. >> exactly. >> with 15 minutes left before the bell, dow down 141 points.
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s&p 500 down more than a quarter of 1%. nasdaq and russell still barely clinging to the green. >> here is a question, in your wallet or in your portfolio or both, where does american express belong, as we await their earnings after the bell. a bull and bear debate on am ex after this. when this bell rings... ...it starts a chain reaction... ...that's heard throughout the connected business world. at&t network security helps protect business, from the largest financial markets to the smallest transactions, by sensing cyber-attacks in near real time and automatically deploying countermeasures. keeping the world of business connected and protected. that's the power of and.
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welcome back. we have a news alert here on the push to avoid a government shut down, what is happening? >> reporter: kelly, congress is facing an april 28th deadline to pass a bill to keep the government running through the end of the fiscal year, but republican leadership seems willing to extend the deadline to reach a compromise, according to gop sources that i talked to. taking more time is actually a positive sign in this case. both sides of the aisle say they want to avoid another government shut down, but there may not be enough time to reach consensus before april 28th. if talks are going well, they could pass a temporary measure that lasts a week or so to give themselves a little more breathing room. the lawmakers are on recess right now and reconvene on monday to assess the status of negotiations. democratic support will be critical to pass a bill to fund
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the government, and senate minority leader chuck schumer characterized the discussions as so far so good. some of the sticking points are monday ooh for the border wall, planned parenthood, and payment for insurers required under the affordable care act. there's plenty of work left to be done and a growing sense in washington that lauwmakers may simply need more time. >> thank you. dow is down 140 points, sitting at session lows for the last couple of minutes. here is the dow heat map. we have six or seven names in the green including america, intel, geu united health, which had had good number. on the flip side, of course, we discussed ibm, down 5% today. that's weighing. so foo are the energy names, caterpillar, chevron and exxon lower. >> coca-cola no benefit from the up great, at least not now. american express set to report earnings after the bell. ramping up all sorts of travel rewards and benefits.
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is it still a good time to buy am ex? >> joining us chris donad, and eric walsh from gougenheim. >> i think the stock itself is relatively cheap here, and am ex when you strip out the losses they've had with costco showing good momentum in terms of spending on am ex cards and growing its loan portfolio. i think there's a lot to like about am ex, masked by recent history. >> eric, i guess what do you say to that and the fact that, you know, this stock used to trade at such a premium for the implied value of its brand, the franchise was considered impenetrable. now it trades at a pretty steep discount to the market. why wouldn't you necessarily think there's value here? >> well, i think there's two issues, and i think chris raises some good points. but the first is -- has to do with the earning revision cycle.
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the earning revision cycle has been negative seven quarters in a row. i think the first question this quarter may answer is whether that cycle is now ending and reversing to positive reinvestigation. if not, then i think the stock is probably more range bound. i think the second issue is less about spending than about the number of card members that it has. its card members have -- in the u.s. have sort of flatlined around 37 million. so i think the big question is are they, in fact, gaining or losing customers given the intense competition from some of the other issuers. >> yeah. chris, as i understand it, part of the issue is that they're a charge card business, not a credit card business. so they can't really carry the balances and have the -- you know, margin that some of their competitors might benefit from. do you see am ex ever changing that? >> well, they do a range of things on the card side. they do have some credit cards and they've been aggressively marketing those. i think at the end of the day american express will be about
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spending, and in my view it looks in some ways a little more like a visa and mastercard as a spend centric model than capital one or discover, which are more lending centric. those visa and mastercard stories deserve higher multiples and i think that's one thing american express's multiple on earnings should rise over time to reflect the business it really is, not so much the lending side. >> yeah, eric. in fact, there used to be a bit of a way of looking at am ex as being partly the payment network, right? it kind of has a payment network. do you think it is not legitimate as a way to try to value the pieces? >> no, i think that it is. i just think that what that analysis misses is that so much of their incremental revenue generation that they, in fact, are publicly targeting is coming from the reexpansion of loans. they lost a big part of their loan portfolio when they lost the costco portfolio, and so their number one strategic priority at the moment is really
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accelerating their loan portfolio growth. so i would just argue that that doesn't really argue for multiple expansion. >> all right. guys, thank you. we will see, of course, how the company's results come in in a couple of minutes. that's chris donan and eric wasserman for now. >> thank you. >> with the dow down at the lows of the day about 140, we will be coming back. >> right after the bull, portlandia has made the pacific northwest city quite famous. the investment strategy is garnering attention of its own. city officials join us to explain what they decided to do. you're watching cnbc, first in business worldwide
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♪ ♪ e*trade. ♪ ♪ start trading today at etrade.com . > . three minutes left to the bell. the dow down about 129, about half of that is actually weakness in ibm. that stock has been down all day, down about 5% right now after last night's earnings. the broader market was close to flat most of the day. s&p 500 was in the green. nasdaq has been positive most of the day, but in the last hour or so, maybe two hours it has sagged. oil price is a big reason for that. oil fell about 5% at one point, and, in fact, the energy stocks have been the weakest performers in the market as well. so all of that coming together to create a little bit, bob, of a -- a little negative tone late in the day. >> as if we don't have enough things to worry about.
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we have trump trades not working that well, geopolitical risks out there. today we have additional kerngs about earnings risk out there, look at a what happened to ibn, with goldman sacks, slightest miss, a high price stock, so risk to the down side. now we have oil today dropping rather dramatically after the inventory reports came out. of course, all of the high beta energy names, devins, chesapeakes, marathon oils, all moved. high beta means they moved higher proportion, if things go down they're bound even more, and they all moved. this is sort of a plethora. i call it a stew of various issues, and it is hard to sort out which is the trump trades not working, which is earnings risk can. >> sure. >> which is geopolitical risk. which is energy railways. but what you can say, i think confidently is you put all of these four or five risks together and you get what we've got here, which is a slow descent in the market. only 2% off the historic high. it is not like there's any panic.
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as you noted earlier in the day, the technicals are holding up well. >> yes, a mini down trend, but not a lot of ground cover. the vicks has been jumpy, but still 14. >> you have been walking the vicks 20 years, you don't pay a lot of attention until it is close to 20. the bottom line is the market is slowly moving down on a huge amount of boredom rather than a huge amount of volatility. the volume is a good 15% to 20% below where it was in february. our numbers have been consistently low for the past month or so. we used to do 3.6 billion shares at the new york stock exchange. we are now doing 2.829, 3.0. that's a big difference. >> a lot of folks pointing to the french election not as an identifiable catalyst but with brexit the back of's people's minds. >> you can't quantity file. people with the numbers say it is 20%, 20%, but you see the effect it is having on the markets. the good thing is low volume to
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me indicates no big sell off. >> right. >> there's no panic, nobody is pushing the button saying, sell everything. that tells me there's still a belief there's an underlying bid to the market. >> thank you very much. ringing the bell at the big board is parker hanafin celebrating 100 years in business. second hour of closing bell is with kelly right now. >> see you in a second. welco welco welcome to "the closing bell." i'm kelly evans. that's the second straight day of weakness we've seen for the blue chips and second day largely for the same reason, namely a big price component had weak earnings. today it was ibm, yesterday it was goldman. the dow closing lower by nearly 2%. the s&p down 4 points at 2338. and as was the case throughout the session today, the nasdaq and the russell, not hearing it.
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they both closed positive. the nasdaq by nearly a quarter percent there to 5863. the russell by .38, 1367. investors turning their attention to more earnings reports after the bell. we have a reporter standing by to bring us results when they come in. josh will follow qualcomm. d.d. roy is ready for he bay. brian sullivan, stanley for us to watch for cs, examine. thank you very much. we will see you in a moment. secretary of state rex tillerson as of a few moments ago is expected to make a statement. we're going to bring that to you as soon as it begins. don't have anymore information to share right now, but the secretary of state will be speaking shortly. we will bring it to you the second that it happens. joining me on the panel today, we have cnbc senior market analyst and commentator, hello again mark santelli. thank you for coming down. >> thank you. >> and the earnings scout, ceo nick reish joins us as well,
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mike. so, listen, it is the story with the market depends on which index you use at. >> it does. ibm exacerbating the look on the dow. in general the market feels as if it has a defensive feel to it. definitely on its heels today after that oil price tumble in the afternoon. so i think that was one other thing. you know, treasury yields were up modestly. we saw very half hearted bounce in the morning, and i think people just don't know if, in fact, this has to be some kind of a deeper flush to get a true -- kind of rebuild of buying power in the market. >> dennis, in the heart of earning season, it is not helping at least for the dow right now. what did you make of goldman's results yesterday? in a way it was more surprising than what we heard from ibm. >> it was. but the expectations had gone up so much, the stock price up so much, obviously reaching all-time hyatt some point not too long ago. so from my perspective it is really sort of a microcosm of
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what we have seen in the post-trump environment, kelly. it is can those stocks reach the expectations of the market, at least as it comes to goldman, ibm and a large number of others of them, the answer is just not quite. it is not terrible misses, but, again, the growth expectations for first quarter gdp growth if it's lucky, perhaps, .5%. >> we know, another week -- >> it is weak, but not quite there. believe it or not, the market is not matching up to the trump rhetoric, believe it or not. >> nick, morgan stanley's results were certainly better than rival goldman, and bank of america had a pretty decent set, the regional banks are doing pretty well hanging in there. what do you think of how we're doing so far? >> you know, for the first quarter numbers they're actually off to a great start. you got 77% of the first 57 companies in the s&p 500 reporting, beating earnings estimates. >> we hate that number. we don't like it because we know, oh, they lower the estimates and clear them. what do you think is more telling about the strength of
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this? >> that's what i was going to lead to. the first quarter numbers only kind of tell you what should have happened in the markets back in 2016, since the market is a discounting mechanism. what we're looking at is the second quarter revisions, and about two-thirds of those companies are seeing second quarter numbers go lower. that's something that wasn't anticipated at the beginning of the year, and part of the trump was we're going to see raise during these expectations. we are getting more of the same. that's something we have seen for the last six years. >> great point. stand by for a moment. the earnings from csx are out. as was mentioned transports and a lot of focus, see if they turn upward momentum. brian sullivan has those. >> yes, a big beat all around for the rail company, csx. adjusted earnings coming in at 51 creates, the forecast 48 cents. topping consensus and the highest estimates by 6 cents. revenues jumped 10%.
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revenue better than expected, coming in at 2.86 or 87 billion. that is a lot more than the 2.76 billion consensus, and the key metric for rail is that it is a bit unique to that industry, operating ratio. that came in at 75.2, basically how full are the rail cars, all of the trains. the estimate for that was 72. so on ever metric, guys, csx beating on just about every segment. welcoming in a new ceo, hunter harrison, earlier this year. looks like mr. harrison has invented or inherited rather a very, very healthy company. that stock up over 1% in the after hours. so csx kicking off the earnings parade, kellie, with a big beat. it is the only train around here that actually comes out on time. back to you. >> that's a great point, brian. thank you. mike, i think hunter harrison's job is clearly done here. >> exactly. >> the stock is up. >> might want to declare victory.
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doubled in a year, held on to gains after that ceo shakeup which was basically with the stock in the high 30s. clearly not a bad company to take over. i would be interested to hear on the call any macro commentary, if it is something more than the fact that they basically got lean. >> remember, the activist campaign to get hunter in there. i think michael ward was the old ceo's name. maybe they should mail an extra check to michael ward for doing that work. harrison has only been there a few weeks, for god's sake. >> this was the only activist campaign he is waging right now, the entire horse, this is the horse. as the journal, the fine paper was pointing out today, hunter has come in there and changed the way they're doing some business. >> really cool stuff. >> quickly, yeah. >> hump yard. >> i didn't know what a hump yard -- never mind. what do you think about csx, these results? >> out of all of the companies reporting, this is the company can with the most positive, sustainable earnings momentum.
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it is not a surprise the number's beat. it has been doing it for the last four to six quarters. now for it to go higher at this point, hunter harrison is going to need to prune cost to make sure he maintains margins and keeps growing because it is the most positive earnings momentum of any company reporting tonight. >> the shares now more than 4%. they're trying to steal volume back from the trucking sector, which has been, you know, benefitting mightily. there have been a it lot of issues with csx we talked at great length with michael ward about, including the drop in coal volumes they had. >> and it seems the anniversary, certainly a lot of the coal stuff, so maybe they're on the back end of that and they can reap the benefits. >> let's slip to am ex while the csx shares continue to rally. the card company's earnings are out. deed raw has those numbers. >> hi, guys. it is a beat on the top and bottom line. in the after hours you see the stock popping a little bit. forecast eps was for $1.28. coming in above that at $1.34
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revenue. that came in at $7.89 billion, above expectations after $7.75 billion. however, i do want to know it is still a decline from a year ago going into this last quarter. am ex has reported two straight years of declining revenue, however this time, kelly, it is a beat on the top and bottom line. we will continue to go through this and look into guidance as well, back to you. >> thanks. the shares are up about 2%. >> that's the point you were making too, which is why they beat estimates but they've been setting the estimates for a long time anyway, to have a declining revenue at a relatively slowly growing economy is not good for a company like american express. >> often you see the market figuring that out as the thing progresses. you might see rallies initially on the beat and next day down 4%. i'm not saying it is going to happen with am ex here. a lot depends on whether they're doing anything to try to fight back against some of the competitive environment they're facing. >> it is definitely about the trajectory of membership and if
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the franchise still has that value or not because the stock is cheap. it is observedly so. it kind of trades at like a big, dumb commodity company as opposed to a branded consumer product company. that's the big wrestling match. >> nick, saying that the underlying in the quarter gives added confidence on the ability to deliver on the 2017 outlook and sustainable growth in the years ahead. so we have a couple of companies at least rallying on the reports. it is a little better than what we've seen in the last couple of days, right? >> well, in post -- they're split up with costco, this is a company that had now three or four quarters in a row of improving earnings expectations so going in line as well. stable revisions. it's been a core holding since their split off with costco. >> i want to go back to csx for a minute because i was a little confused about something, and there might be different ways to describe this with the operating
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ratio. my understanding is that one of the things they want the new ceo to do is really push that down, or the one that's the measure of their expenses way down, and that's where hunter harrison and his previous rail company has done quite a bit. it looks like that might have actually gone up quite a bit in this quarter. management is saying that there's a restructuring charge that drove a 13% year-end increase in expenses in first quarter. interestingly enough investors are not only looking past that but gives more room to push forward in implementing the campaign. >> harrison is known as an operational wizard for railroads. so i think he will get the benefit of the doubt that whatever kind of charge they took and kind of front load some of these expenses is going to translate. who knows if the market is right about that, is going to translate into, you know, a much bet et operating machine. >> transports closed up 43 points. that's one of the things that, as people point out, we obviously look at the dow as what happened in the market today. >> sure. >> i know we're not supposed to do that anyway, but the fact
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that the dow transports took 43 points, there's a lot more going on than meets the eye. >> often index oil prices, so as the oil price goes down typically transports would move up. >> you would think, but it's usually been -- it is almost like we're going back to the way it should be if they're rallying because oil is down instead of the way it was last cup can will of years. >> from the standpoint of airlines, as united show, i hate to veer into united but it is relevant. these companies are running at relatively high capacity. there's been so much consolidation. there was a trucking deal which probably nobody talked about, swift, but these industries across so many sectors are con grom rating giving them pricing power. >> the trucking sector not benefitting. you would think the increase in how the economy is doing, i know it is not great, but they would obviously benefit from that. they're so fragmented and right now as you can see the competition from the rails is picking up. >> and to a large degree i think trucking is levered to the buying of stuff at retail.
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so it is kind of an echo effect of weakness, i think, in retail on some level. also, the fact it is a half percent gdp first quarter economy, so it is not running that high. i would say with the transports, that's one of the areas of the market that truly has correct. it was down 8% or so off its high, banks were down 10% off their high. even though the s&p only went down 2% or 3%, those are the areas with a gut check. >> i'm curious with the retail sector, we will not get into it for several weeks, but should we be bracing for whatever seems to be happening to earning seasons for it to hit the skids? >> the retail are some of the worst industries performing in the post-trump trade since election night. they've suffered. we're not going to find out those for nearly another month when they report their april kwarder ends. >> and what about the energy names where we keep looking at the price of oil on a day like today and it reminds me of the financials where, they benefitted from higher rates in
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the quarters but rates have slipped. if oil prices were better verses last year but now they're slipping, what impact do you think it will have on the way people interpret results from the energy companies, which are supposed to be one of the biggest contributors to growth? >> it is huge. today's drop in oil should raise eyebrows because what people don't realize, almost half of expected profit growth for the entire s&p 500 in twoeft is expected to come from a monster bounce in the energy sector. if oil prices fall too far too fast, you will see a lot of downward revisions to not just the energy sector, which has extremely high expectations, but to the over rising s&p 500 as well. >> thanks for joining us. nick raish, nick berman. breaking news on alcoa. what is happening there? >> hi, kellie. alcoa announcing consolidation moves. it says it is closing its new york city office and moving headquarters to pittsburgh. alcoa saying it will close an additional seven administrative offices in the united states, europe and asia, and plans to
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seen a annual savings of five million dollars. we are digging through this release right now. no mention had of a cut down in workforce at this point. again, kelly, closing its new york city office, moving headquarters to pittsburgh. back to you. >> pittsburgh's cool. >> back to pittsburgh i think is the relevant thing. i think they moved out maybe a decade ago or something like that to new york city. >> pittsburgh i'm sure -- >> it is known as a core pittsburgh bellwether. >> wow, this is great. not for new york city, but anyway alcoa is going to pittsburgh. thank you. qualcomm also moments away from reporting earnings. up next, we will get reaction and how the chip maker's ongoing legal battle with apple could be impacting bottom line. plus portland, oregon is freezing investments in stocks and bonds. the city's commissioner tells why they're taking this unusual move and whether it could end up resulting in higher taxes. you are watching cnbc, first in business worldwide the power . >> this cnbc program is
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welcome back. there's a live shot of the state department where secretary of state rex tillerson is expected to make a statement any moment now. again, not sure what exactly he's going to discuss, but we will bring it to you live as
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soon as it begins. meantime, we have more earnings coming out. qualcomm is out. out to josh lipton for the numbers. >> qualcomm reporting eps here of $1.34, versus expectation of $1.19. expectations of 5.89 billion. turning to the reporting segments here, qtc revenue, 3.676 billion. msm chip shipments look inline at 179 million. qtl, the licensing business revenue, 2.24 billion. turn to the guide here, kelly, qualcomm guide revenue, 5.3 at 6.1 billion. estimates at 5.9 billion. the is 90 cents to 1.15. qualcomm is higher here in the after market, but it is the worst performing tech stock in the s&p 500 this year. one problem there is is the legal fight it is now having
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with apple. you can be sure analysts will have a lot of questions about that fight on the conference call which kicks off at 4:45 eastern and we will be on it. kelly, back to you. >> all right, josh. thank you, the shares losing a little bit of popped up, less than 1%. more reaction to the results, welcome vee yay rakesh who joins us on the news line. ed, first to you, the main question is how much these patent disputes with apple would hurt them. >> clearly not here. they beat nicely. they're good at advising analysts on what they're looking to do. thing about qualcomm is it owns standard essential patents, what they're called. if you are a cellphone maker, you can't make a cellphone without paying qualcomm something for the patents they own on that technology. apple has been charging, what now the u.s. government has been recently charging is they've
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engaged in uncompetitive practices where they force people to buy their patents and chips. apple says it is unfair. there's been a qualcomm where they have held back rebaits to p a will. it is a mess. they're going to take a hit. it will happen sometime this year maybe, next year likely. >> is that why you think there's a response here? >> i think the stock reacted to litigation early on. i think the stock had a pretty good performance end of last year, but coming into the year with apple litigation it is obviously under performed index. i think that's reflected in the stock, and i do agree that it is an all high on the stock somewhere in the back half where it appears looks pretty good, especially looks like picking up share in china. that should be positive for them in year to come. >> you know, i guess i wonder just in terms of what the marge will ultimately pay for this business, it's 11 times
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earning -- >> here is the secretary of state. let's listen in. >> today i would like to address iran's alarming and ongoing provocations that export terror and violence, destabilizing more than one country at a time. iran is the world's leading state sponsor of terrorism and is responsible for intensifying multiple conflicts and undermining u.s. interests in countries such as syria, yemen, iraq and lebanon and continuing to support attacks against israel. an unchecked iran has the potential to travel the same path as north korea and take the world along with it. the united states is keen to avoid a second piece of evidence that strategic patience is a failed approach. the comprehensive iran policy requires that we address all of the threats posed by iran, and it is clear there are many. iran continues to support the brutal assad regime in syria,
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prolonging a conflict that has killed approximately half a million syrians and displaced millions more. iran supports the assad regime even as it commits atrocities against its own people, including with chemical weapons. iran provides arms, financing and training and funnels foreign fighters into syria. it has also sent members of the iran revolutionary guards to take part in direct combat operations. in iraq, iran provides support to some iraqi militant groups, primarily through the force which has been undermining security in iraq for years. iran maintains a long-standing hostility towards israel, providing weapons, training and funding to hamas and other palestinian terrorist organizations. inde in deed and propaganda they
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foment discord. just yesterday they displayed a missile marked, death to israel in a parade. over throw of the government by providing military equipment, funding and training, thus threatening saudi arabia's southern border. coalitions forces in the arabian sea have revealed a complex iranian network to arm and equip the hookies. iran naval vessels harass u.s. naval vessels operating lawfully. iran has conducted cyberattacks against the united states and our gulf partners. iran has been behind terrorist attacks throughout the rest of the world, including a plot to kill the saudi ambassador to the united states at the time. whether it be assassination attempts, support of weapons of
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mass destruction, deploying destabilizing militias, iran spends its treasure and time disrupting peace. iran continues to have one of the world's worst human rights records. political opponents are regularly jailed or executed, reaching an agonizing low point of executing juveniles and individuals whose punishment is not proportionate to their crime. iran arbitrarily detains foreigners, including u.s. citizens on false charges. several u.s. citizens remain missing or unjustly imprisoned in iran. apart from the abuses inside iran's own borders, it is the threat it poses to the rest of the world. iran's nuclear ambitions are a grave risk to international peace and security. it is their habit and posture to use whatever resources they have available to unsets people atled nations. with its latest test of a medium
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range ballistic missile, iran's continued development and proliferation of missile technology is in die phi answer of u.n. security council resolution 2231. it has previously stated it will conduct a second test fight of the space launch vehicle which will put it closer to an operational intercontinental ballistic missile. any discussion of iran is incomplete without mentioning the jcpla. the jcpla fails to achieve the objective of a non-nuclear iran and only delays their goal of becoming a nuclear state. this deal represents the same failed approach of the past that brought us to the current imminent threat we face from north korea. the trump administration has no intention of passing the buck to a future administration on iran. the evidence is clear, iran's provocative actions threaten the
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united states, the region and the world. as i indicated at the beginning, the trump administration is currently conducting a comprehensive review of our iran policy. once we have finalized our conclusions we will meet the challenges iran poses with clarity and conviction. thank you. >> to the speaker of the house, iran is complying with the tems of the nuclear deal. if you break out of that deal, won't that send a signal to north korea and other rogue nations that the u.s. can't be trusted to keep its end of the bargain? and iran is already being sanked for its terrorism or missile event by the u.s. is another option, one that many republicans on the hill suggested, to increase those sanctions, to punish iran for those behaviors? >> well, andrea, i think it is important in any conversation on jcpla -- and i think this was one of the mistakes in how that agreement was put together -- is
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that it completely ignored all of the other serious threats that iran poses. i just went through a few of those with you. that's why our view is that we have to look at iran in a very comprehensive way, in terms of the threat it poses in all areas of the region and the world, and the jcpoa is one element of that. so we are going to review completely the jcpoa itself. as i said, it really does not achieve the objective. it is another example of buying off a power who has nuclear ambitions. we buy them off for a short period of time, and then someone has to deal with it later. >> so should we -- >> we just don't see that's a prudent way to be dealing with iran, certainly not in the context of all of their other disruptive activities. >> mr. secretary, you mentioned that the jcpoa is another example of a failed approach
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with strategic nations [ inaudible ] north korea. on north korea, is there serious consideration being given to relisting it as a state sponsor of terrorism, a designation removed, in fact, by the bush administration? >> we're reviewing all of the status of north korea both in terms of state sponsorship of terrorism as well as all of the other ways in which we can bring pressure to bear on the regime in pyongyang to reengage, but reengage with us on a different footing than the past talks have been held. so, yes, we are evaluating all of those options. >> are you worried about the situation in the streets of ka rauco kra -- are you worried about the
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situation there? >> we are concerned the government of madura is violating its own constitution and not allowing the option to have their voices heard, nor allowing them to organize in a way that expresses the views of the venezuelan people. yes, we are concerned about that situation. we are watching it closely and working with others, particularly through the oas, to communicate those concerns to them. >> thank you very much. >> thank you. >> that's secretary of state rex tillerson making a surprise announcement at this hour, saying they're currently conducting a comprehensive review of our strategy with iran today after listing a number of grievances the u.s. has. let's get reaction from kayla touche in washington now. >> reporter: it was a public denouncement by the secretary of state of actions iran has taken. he listed iran being a state sponsor of terrorism, cyber activity, it's holding of
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prisoners and an attempted plot to kill the saudi ambassador to the u.s. the backdrop to the announcement he made that they will be conducting a wide scale review of the country's policy is the fact there was a 0-deadline that was reached. every 90 days the administration has to notify congress where iran is in compliance with the deal. secretary of state tillerson notified speaker ryan of that, and that drew criticism because president trump has been critical of the iran deal. he has called the obama administration and seth of state kerry incompetent for the way that it was negotiated. but it was an admission that, at least, under the terms of that deal iran was actually in compliance. that was the first of those reports that was issued under the trump administration, but he did say in that letter that the president has authorized a review, an interagency review of not only that deal but also of the iran policy because of those grievances that you just listed.
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it is interesting to see this public announcement, which is basically a diplomatic execution of what president trump was saying on the campaign trail, despite the fact they're acknowledging at the same time that as far as the current deal goes iran is compliant with it. >> all right. that might help explain the timing of this announcement, kayla. thank you. michael, regardless of why they're choosing to do this, it is consistent with what we've been hearing from this administration about iran for sometime. what does it mean for the market? >> yeah, exactly. we saw a little blip higher in oil prices. i don't know it adds a lot of understanding to the geopolitical stance, but just the idea that the administration is taking these opportunities to strike a hard line with north korea and iran at the very same time, you know, i don't know it necessarily helps risk appetites but i'm of the belief these things don't make their way into financial markets unless it is by way of something like an oil shock. >> and that's, of course, what we've been watching after the big slide today. even there it would be a muted response. all right. we will continue to bring more from that as we get it. now, ebay's shares are lower after reporting earnings just a
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few minutes ago. we're going to bring you the full results when we come back. then we're gonna go in and remove your '67 corvette. my vette!?t's just a gall bladder! you don't have.. aflac! paying you cash,o you might have tsell that sweet little musclchinst to cover your rent. more funny juice. but my papa gaveme...th. what do you wish you had? aflac. healthan change, but the life you love doesn't have to. keep your lifestyle healthwi- afc! briathe customer app willw if be live monday. can we at let analyzcuster c can we push the offer line? brian, i just had a quick question. brian? brian.. legacy technologcan handff anyompa. but " here. you're saying the new app will go live monday?! yeah. with help from hpe, we c finally work the way we want to. with the right mix of hybrid it,
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welcome back. quite a mixed day on wall street. if you looked at the dow it would be a down one, in large part because of ibm's weak
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results last night which weighed heavily on the index. dow down 118 on the bell, but look at the nasdaq, up 13. the russell was up 5 today. here are movers after hours for you, a lot moving higher in fact. it changed in the last couple of afternoon sessions. american express roughly unchanged after better than expected earnings. csx moving higher by 3%. qualcomm up nearly 2%. of course we'll get more from the conference calls and so forth into the session tomorrow. ebay reported earnings to round things out. get to dee dee roy with those numbers. that stock moving lower, i should add. >> yes. that stock definitely moving lower, kelly, that's right. that could be driven by the fact the guidance came in weak on the revenue side as well as eps. as far as the top line revenues are coming in line with expectations at 2.2 billion. eps beating the street by a penny at 49 cents. again, the company's guidance came in light on both the eps and the revenue which could be
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driving the stock lower. another important miss here was the gmv, coming in at 20.9 billion. analysts were expected 21.06 billion, so a miss. another valuable number that analysts have been looking at is user growth, and ebay is reporting 169 million. the street's been looking for 168.6 million active users, so that's basically in line with expectations. ebay has been facing a lot of competition from companies like amazon, google, facebook and on the call we will look to hear for more color on the misses. back to you. >> thank you. those shares down about 1.5% at the moment. the city of portland, oregon is voting to pull corporate investments, totaling about half a billion dollars. it comes after activist pressure called for portland to reconsider investing in controversial companies. he joins us now from the city of roses. welcome, dan. >> thank you.
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glad to be here. >> so perhaps understandably, this story -- i don't want to say it's gone viral, you know. in a way it reminds people of portlandia which rifts on the culture of portland in seeming so extreme. this move seems extreme. can you explain what led to it? >> first of all i want your viewers to understand we are not devesting, just no longer going to continue to invest in corporate bonds. sorry, but i lost the audio. >> sure. go ahead. can you hear me now? >> i can hear you now, yes. >> you were saying you have chosen not to invest anymore in corporate bonds. why? >> the bonds we currently hold we will hold to maturity. but the reason behind the decision is we have in portland, and a lot of cities, you know, shareholder activists, people who are very concerned about what corporations, corporate behavior, what they're doing, and they come to us because we owned corporate bonds. we don't own stocks but we own corporate bonds.
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and they want us to either divest or no longer invest in those companies, and, frankly, it was becoming a very time consuming process. we had city council meetings that were going on in hours and hours and hours, in addition to meeting with these people on an individual basis. i felt we were being asked to be a jury and to try corporations one at a time. it just got too time consuming. i am a city commissioner, i am elected to fill potholes, to take care of children, to make sure we have adequate resources for domestic violence, and affordable housing. you know i'm not -- >> these are incredibly important objectives and i understand the way it can take up a lot of your time, but as you're aware here is what the mayor said, that the money the city would lose can pay for 850 wheelchair accessible curb ramps, more than 676 new beds for the homeless. how does it help accomplish portland's objectives?
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>> well, it is not without an opportunity cost. there's no doubt about that. but i felt -- and the majority of my colleagues agreed, that this was the most prudent course for us to pursue, that we couldn't continue to have these corporate trials in city council proceedings. >> is there a way to address that, tan, without just having to cave, i'm going to say, to their demand? of course, the other piece of this is that revenue will have to come from somewhere going forward or else the city won't be able to provide essential services. so does that mean a tax raise? >> no, it doesn't. i mean the amount of interest we receive from our corporate bonds is about $4.5 million. the city of portland is a $3.5 billion enterprise, largely supported by taxes and fees. so, yeah, there's an impact, as i said. there's an opportunity cost. but it is not an insurmountable one. >> this seems to have to do in large part with companies like wells fargo who you owned some of the corporate debt of. we're aware they recently had a
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sales scandal, they say they resolved it. also in your holdings are u.s. bank, toyota, for example. did you just feel as though in every single case your holdings could not justify any further investment and that as a result there's going to be blanket no more investment in corporate bonds? this leaves you with holdings of companies like fanny and freddie, other parts of the u.s. government, the treasury, for example, and that's it. are you going to revisit this decision at all? >> we can always revisit it. you know, the city council changes and, you know, things can always change. ten years ago we only invested in very safe government securities. we didn't invest in corporate bonds at all ten years ago. >> dan, do you feel as if the opportunity cost, as you've described it, has been kind of well understood across the population of the city -- in other words not just among the activists who are willing maybe to forego that little bit of interest, but more broadly was it a controversial thing? >> you know, i'm kind of surprised how little reaction we've gotten from the general
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public. i would say the shareholder activists didn't necessarily view my motion as a win. many of them wanted to continue to be able to try corporations in front of the city council and have us act as a jury and issue a verdict. so they didn't all view it as a win. >> well, that says a lot. dan, thank you for joining us, explaining what is going on there. >> you're welcome. >> that commissioner for the city of portland, oregon. meantime, the battle over high drug prices rages on. this ad from the pharmaceutical lobby group is the latest in the sal voe over the debate who is responsible for soaring prices. we have officials from both camps to debate this next. tune in tomorrow for cnbc for a take on the global economy from two european heavyweights, imf kristine lagarde. stay with us.
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salvo over the debate who is
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welcome back. president trump has repeatedly attack the high cost of prescription drugs. here are some of his latest comments. >> i think we're going to do it in healthcare or we're going to do it separately, but we're going to bid out drug prices and try to have the lowest prices anywhere in the world from the highest. >> all right. so why are drug prices so high? a new study out today finds no correlation between high drug prices and rebates that manufacturers negotiate with pharmacy benefit managers.
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these are the people who administer prescription drug plans. they say the rebates they get are passed to consumers. they're also the lobbying group behind the study. drug companies, meanwhile, say the rebaits are not being passed on and are, instead, benefitting insurers and drug plan administrators. it is a high drug price blame gamez kalting for sometime. joining us to discuss it, meeting terrell and steven ubel along with mark merit are, president and ceo of the pharmaceutical care management association which came on with today's study. we have a ul full house. thank you for being here. mark, how can you say that the rebates are passed purely to consumers? are you totally 100% confident about that? >> it is up to the health plans who work with pbm's. they work to reduce prescription drug costs. we pass those savings to the plan, and the plan decides how to use them to reduce premiums, out-of-pocket costs or whatever,
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to reduce costs for consumers. but you throw in a new $100,000 drug on the market, not all health plans have the money to put it into their benefits and provide coverage for everything they want. would be great if they did, but the high drug costs present a challenge. >> the study out today says there's no correlation between rebates negotiated by pbms and driving up drug prices. a key message from the drug industry has been there's an incentive from those in the middle, the middle men really in the system like pbms to drive list prices up. is that what is happening from your perspective? >> there is some miss aligned incentives in the pbm model, but even mark's members, express scripts and cvs commented drug spending is up in the neighborhood of 3.5%, and we know net prices are up something like 2.8%. so we actually think drug spending is decelerating, and the real question is the
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negotiated discounts that mark's members negotiate with our members are not making their way to patients. we've done two studies, one that showed our members retain about 63% of the list price of a medicine, nearly 40% is rebated to other actors in the supply chain, whether that's pbms, insurers, wholesalers and distributors, government-mandated discounts and so forth, and that 50% of the time a patient in the deductible phase, their out of pocket spending, 50% of commercial pend for pabts is tied to the undiscounted price. if we go to the hospital that's in that work, or we go to the doctor, we're paying a price that's negotiated. it is crazy that's not the case with regard to a earn about's medicine. >> so, mark, let me bring you back to respond to that. >> sure. >> explain what role you play as you see it in bringing down drug prices for the consumer. >> sure. large, sophisticated pairs, employer's unions that provide
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benefits, that discount with drug companies, they have huge negotiating power to bring drug costs down. we promote generics and get discounts on the brand drugs. i agree with steve that the net costs are not as high as people think because we're able to drive down the costs and negotiate the discounts. that's what medicare part d is such success, so much aggressive negotiation. i think steve would agree with us on that. the challenge in terms of the rebates passed on again, that's another pricing issue because the challenge for health plans is if prices of health care go up, whether drugs or hospitals or whatever, it is hard for them to just continue to provide coverage on everything that comes to market. they want to, we would love them to, i'm sure steve would love them to, but there are only so many dollars to go around. >> mark, do you dispute, we had that graphic up just now about the epipen and you probably remember from last summer when mylan ceo helpinger brush said more than half of the price of this thing on a list basis goes back to folks like you guys.
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do you dispute those numbers? >> that is one of the biggest scans in the healthcare today. >> epipen specifically? >> what they claim, the drugmakers claimed was we had to raise prices because of middle men costs and these things, and as soon as political heat came down they cut the price in half and called it a generic. what is the big deal? the reality is we negotiate discounts. drug companies are sellers, we are buyers. drug companies want the prices to be as much as they can, like any other business. i'm not saying that's good or bad. we represent the buyers who want costs to go down as much as we can. that's just the reality of it. and when drugmakers say they're reluctantly raising prices because of supply chain costs, everybody has supply chain cost, every industry has supply chain cost. what we do is negotiate discounts on behalf of those payers who need those prescription drugs. >> steve, just want to go back to you before we have to go on this. what role do you think you could play then purely in bringing down drug prices? because, you know, forget everybody else who is in the room, this could also be a
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one-on-one relationship, right? >> yeah, i mean we -- everyone in the system can do more, and we think, you know, the pbm model, which is really driven by, you know, the greater the discount larry placement needs to involve to outcomes based arrangements, we are reimbursing the drug by the patient. i know mark and his members want to move in that direction as well. but again, our main point is, mark's members are negotiating a harder and harder bargain. rebates and discounts have nearly doubled over the last few years alone. and those rebaits and discounts are not making their way to patients at the point of seam and we have to ensure, particularly with more americans in highly deductible plan, they're finding themselves having to purchase insulin for chronic disease, for example. >> that they're able to access the same discounts that insurers and pbms are negotiating for everyone else.
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>> we have to leave it there. it wasn't a knock down, drag out fight. but there was some -- >> i agree. >> buers and sellers. >> meg terrell, steven, thank you everybody for joining us. i appreciate it. let's take a look at american express shares. the credit card company is attempting to attract new and younger consumers who averted just about any lengths for the reward cards. any lengths. we will prove it next. nalltakinn that schwab billbo oh, not ft, carl. . been different.
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>> welcome back. shares of american express higher by about 2%. they posted an earnings beat this afternoon.
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they have been under intense pressure to stay competitive in a market where millenials are focused on rewards around percs. after being rejected for the chase sapphire, mary ciao tweeted chase in a costume she made of the card, hoping for a second chance, she has since been approved for the card and has it. joining me now is mary, herself, she works in cyber security in san francisco. thank you for being here, mary. >> thank you for having me. >> do i understand you actually still have this in your possession? >> yes. i do. would you guys like to see it? >> let's have a look, please. i like the millennials that's on the card? >> yes. so. yes. funny, just made out of cardboard and some simple construction paper and it was pretty fun to put together. >> you dade good job recreating the chips with the lines on it. mary, how much do you spend on
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fee,? how many credit cards do to have you? how was this one so important? >> i have six credit cards, six of the three premiums are higher credit card annual fees. i used these cards based on different purposes that i have for what i, for my day-to-day type of spending. the reason i was so interested in the chase sapphire reserve is there is a sign-up bonus. they have there unwe heard of 100,000 points for a sign-up bonus. chase has a lot of great partners, you can transfer the points to. a lot of my friends were very interested in this card. >> i want to know how much you profited from that. by the way, since we were on the subject of american express and their earnings, are any of your cards amexcards? >> i have an amex card. it's in thereing. they -- it's interesting. they have a lot of users that have jumped over. which is why they went ahead and are trying to do more for their
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card. they recently increased the 5x for flights, for points. they're giving out uber credits on a monthly basis. they're trying to win back those millennials. >> mary, on the one hand, i imagine these companies would love to hear the story of somebody so committed to getting their product and using it so intensely. but on the other hand, it's mostly because of what you can get back for them. so i guess is it a purely hard headed calculation of a set of how you can maximize the value of these things? is there any brand loyalty or prestige factor involved? >> i do think there is a bit of both. when are you signing up for a credit card. you think of the sign-on bonus. that's very important. that's where you will make the biggest return on investment and then there's the actual spending, so with chase, you get 3x points for travel and airlines and things like meals and dining out and that's something that a lot of millennials do, right. so to be able to earn 3x points
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is a lot of points you get back quickly. on the other side, i think there is brand recognition. i think amex has a bit of that elite you know brand recognition, so that's something to think about, too. >> mary, thank you. it's been a real window into what's going on in this country. i appreciate you joining us. i love the costume and the spirit. mary choo. "fast money" begins right now. "fast money" starts right now. onto the nasdaq markets overlooking new york city's time's square, i'm mellissa lee. tim see mohr, karen finerman, guy adami and steve najerian. american express, tsx all on the move, the headlines from their conference call later on in the show. plus, sales from china suffering their first drop in 27 years. though china got to experience it's own

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